UNLV economists see modest local growth in 2003

Jennifer Shubinski

Wednesday, Dec. 18, 2002 | 11:18 a.m.

The national economy, still in a shallow recession and slowly recovering, will continue to affect Southern Nevada and its tourist-based economy in the coming year, economists said Tuesday.

"We're looking then for 2003 to be very much the same" as 2002, said Keith Schwer, director of the Center for Business and Economic Research at UNLV. "The national economy is muddling along or anxiously awaiting the green light."

Schwer was one of the presenters Tuesday at the center's Southern Nevada Economic Outlook 2003.

The 2003 economic outlook for Southern Nevada is more encouraging than the rest of the nation: expansion, modest growth -- by Las Vegas standards -- and continued employment growth.

"We are growing in Southern Nevada and learning to live among uncertainty," Schwer said.

With no major casino resort openings in 2003, widespread concern about public safety and a potential war with Iraq, only modest increases in tourism are expected, economists said.

Las Vegas hotel occupancy rates are not expected to return to prerecession levels in 2003 and 2004. Economists did forecast a slow improvement in the next couple years over the current average of 80 percent overall hotel occupancy rates.

Visitors to Las Vegas are expected to increase to 36.2 million people in 2003, slightly higher than pre-Sept. 11 numbers, according to data presented at the conference. By 2004 economists expect 37 million visitors to Las Vegas.

Gaming revenue is expected to grow by 2.3 percent in 2003 and 2.9 percent in 2004 -- growth rates far below historical averages, Schwer said.

Much of Southern Nevada's tourism market comes from its neighboring states, but with negative or no job growth in many of those states, 2002 wasn't very encouraging, said Mary Riddel, associate director of the center.

Nevada has led neighboring states such as Arizona, Oregon, California, and Utah in job growth, at just over 3 percent.

Riddel forecasted an upturn in job growth for almost every state, including California, which didn't see any employment growth in 2002.

"We are the leader in the West as far as job growth," she said. "We're not getting a lot of help in the West for our tourism industry."

Economists also forecasted continued population growth, keeping Las Vegas' housing market strong and prices on homes steadily increasing.

Riddel said in 2003 she expects the number of housing units permitted to grow by 4.9 percent but said the expected rise in interest rates in 2004 will drop that growth to 4.2 percent, or 31,456 permits.

Another key topic facing Southern Nevada next year will be the state's fiscal crisis.

"The discussion should be about sustaining one of the most productive economies in the United States," Schwer said.

Nevada is not alone in its fiscal woes.

Nevada is one of 19 states that are facing dire situations in their state budgets, Schwer said.

Discussing the merits and problems in several proposed taxes, such as a broad-based business tax, a gross receipts tax or a corporate income tax, Schwer said more research needs to be done to see how a new tax would effect the state and the people paying any new taxes.

"I'm suggesting that we haven't done our homework," he said. "The consequences are important to discuss."